There are two ways how an investor can make money from investing in the Philippine stock market. It can be either through dividends or capital appreciation.
Putting your money in the stock market is a profitable venture. To understand how much money you can make from this investment, please read on.
Capital Appreciation of Philippine Stock Market
From the term itself, capital appreciation means that your capital investment has gone up and you earn from the price per share of the stocks you invested.
However, this method of earning money from stock market does not guarantee long time profit. It’s because the price behavior of the stock depend on the current supply and demand for each trading day.
There’s also possibility that the capital appreciation may turn to loss. This can happen when an investor loses confidence and decide to sell the shares that would result to pulling the price of the stocks down. This is a major risk common when investing in stocks.
Company Dividends in Philippine Stock Market
Investors can earn money from the stock market when the company shares a fraction of its earnings with the shareholders. This is how dividends work in which the investor can earn through additional stocks or in cash. If stock dividend is shared, it is credited directly to the stock portfolio of the investor and if in the form of cash, it will go directly to the investor’s account balance.
Like capital appreciation, earning dividends is not guaranteed as well. It’s because the investor will just wait for the decision of the company’s board of directors whether to give dividends or not.
Once you decide to invest in the stock market you should not get excited about the figures that you can earn. As an investor, you should implement a strategy that would be to your advantage. One of the effective strategy when investing in the stock market is to buy shares when its price is low. This will enable you to maximize the ROI as you can sell your share in higher price.
In addition, the amount of money that an investor can earn from the stock market also depends on the period of investment, the stock’s dividend rate, and the strategy implemented.